The news slipped out a couple days ago that the NHL has been running the Phoenix Coyotes since February. It was a statement from Glendale, Arizona (home of Jobing.com Arena which is the Coyotes home) city manager Ed Beasley. He was trying to assure local taxpayers that the Phoenix Coyotes were paying their debts for parking fees and security costs at the arena. He was entirely unconcerned about the NHL public relations department that hade been trying to hide this information. Almost immediately the Phoenix Coyote front office denied that they are “reporting to the league”. This appears to be a carefully parsed statement to appear as denial to the Arizona Republic newspaper reports of Ed Beasley’s claims. Bill Daly of the NHL responded by saying “I believe the Coyotes will be in Phoenix next season. I won’t comment specifically on the article, other than to say it contains some inaccuracies,” which is clearly not a denial of the story.

Despite a lack of transparency in the NHL and a willingness to misrepresent the situation to try to hide the problem, we know that the Phoenix Coyotes are in a bad financial situation. The team has never made money and with the economic downturn owner Jerry Moyes does not seem to be able or willing to absorb the losses any more. The NHL has “loaned” Phoenix money to survive last season.

It is very likely that this is not a loan at all as it seems very unlikely that the money will ever be paid back. Owner Jerry Moyes seems to be (for the most part) out of the picture now. The NHL is actively looking for a new owner for the team. This is hard to do in a good economy and nearly impossible today. The situation is made much harder due to a restrictive 30 year lease that the Coyotes have with their Glendale arena. Most experts believe the lease will have to be re-negotiated for the Coyotes to have any chance to survive. That assumes that a willing owner can be found to keep the team in Phoenix, which is not a good assumption at this point.

It does appear that the NHL is paying the Coyotes debt and overseeing the budget. Likely all that the NHL requires is that the Coyotes do not spend significantly more money than they have to. Thus, aside form a rough budget agreement, the Coyote front office is not reporting to the NHL. They are free to run the hockey operations as they see fit - within an NHL approved budget. Probably this means that the Coyotes trade deadline performance of selling off Olli Jokinen, Derek Morris and Daniel Carcillo was done for budgetary purposes (at least more so than hockey purposes). It may mean that the Coyotes will make further moves to reduce payroll in the off season. In that case, Ed Jovanovski is probably a prime candidate to be moved.

It seems clear that the NHL will do everything possible to have 30 teams in the NHL next season. The Coyotes lease probably prevents them from moving, despite a lack of ownership. In all likelihood, the best place available to move the team to in time for next season would be Kansas City, but it seems unlikely to get out of Phoenix. If the situation continues the NHL may have to contract the Coyotes. Likely they would add a new expansion team to bring the league back to 30 teams (though there may be a year or more between these events). If there is some time available before the expansion, the logical market is Toronto or Southern Ontario. A second team could easily be supported in the area.

It appears the Phoenix Coyotes are all but dead. The chances of the team being revived within their Phoenix market are very low. The NHL is propping them up right now and trying to hide that fact for public relations purposes. The Phoenix situation teaches us that the NHL announcements about the financial viability of all their markets are not to be believed. There are likely other markets in bad shape as well (though not as bad as Phoenix). The NHL will try to hide that information and it will likely come out slowly and after the fact. There will be some changes in the location and possibly number of NHL teams in the future. The Phoenix Coyotes situation demands it and there may be others not too far behind them.